Distribution Solutions Group (DSGR) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue reached $478 million, up 14.9% year-over-year, driven by five 2024 acquisitions and 4.3% organic average daily sales growth.

• Adjusted EBITDA increased 18.6% to $42.8 million (9.0% margin), with margin expansion across all core segments despite integration costs.

• Net income was $3.3 million (diluted EPS $0.07), reversing a net loss of $5.2 million in Q1 2024; adjusted diluted EPS was $0.31, up from $0.25.

• All three core verticals—Lawson Products, Gexpro Services, and TestEquity—delivered year-over-year EBITDA margin expansion.

• Management remains cautiously optimistic amid trade policy uncertainty, focusing on integration, margin improvement, and long-term value creation.

Financial highlights

• Adjusted EBITDA for Q1 was $42.8 million (9.0% of sales), up from $36.1 million (8.7%) a year ago.

• GAAP net income per diluted share was $0.07, compared to a net loss of $0.11 last year; adjusted EPS was $0.31, up from $0.25.

• Operating income was $20.1 million, with $11.6 million in intangible amortization and $2.7 million in severance/non-cash charges.

• Trailing 12-month free cash flow conversion was ~90%; ROIC using NOPAT was ~11%.

• Gross profit increased to $164.0 million (34.3% margin) from $143.4 million (34.5%) year-over-year.

Outlook and guidance

• Management expects continued margin improvement as integration synergies are realized and new sales reps mature.

• Source Atlantic margin improvement to 10% EBITDA is now expected in 2026, delayed by top-line softness and market uncertainty.

• Focus remains on organic growth, digital expansion, strategic M&A, and capital structure management.